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Two-thirds of Americans financially shaky

Most don't have emergency funds to handle an unexpected $1,000 expense, a new survey indicates.

By Donna_Freedman Aug 12, 2011 8:12AM

The National Foundation for Credit Counseling did an online poll in July and the results aren't pretty. If confronted with an unexpected bill of $1,000, only 36% of respondents would be able to tap an emergency fund.

I suspect a lot of us wouldn't be wild about forking over $1k. Ideally, we'd all be able to do it anyway. But that other 64% is all over the fiscal map, and heading into tragic financial territory.


Here's how those folks say they'd pay:

  • Take out a loan: 9%.
  • Borrow from friends/family: 17%.
  • Cash advance on credit card: 9%.
  • Disregard other monthly expenses: 17%.
  • Sell/pawn assets: 12%.
Some people can't save because of unemployment, underemployment, medical issues or other reasons. I'm not talking about them, but rather about those who don't make saving a priority. Ever know people who:
  • Kvetch about how much everything costs -- but keep buying?
  • Scoff at coupons and meal planning?
  • Won't even consider consignment stores?
  • Never wait for sales or search out online coupons?
  • Refuse to give up even a single creature comfort because they "deserve" such things?
Here's the thing: If you'd have to skip a car payment to deal with an emergency, you need to figure out a better way of handling funds.

"Without adequate savings, consumers have poor resolution choices when an emergency arises. People often say they can't afford to save, but the truth is that they can't afford not to," says NFCC spokesperson Gail Cunningham. Post continues after video about a similar poll.

Current sacrifice, future gains
For a couple of stretches in my life I've been scarily close to the edge. The reason I made it through was that I was willing to go without certain things (i.e., pretty much anything nonessential) in order to meet certain goals.

Chief among those goals was to build an emergency fund. Having even a slim cushion of cash provided tremendous peace of mind and -- bonus! -- once established it kept my spending in check. Frankly, it had been so much work to build even a small savings account that I would move heaven and earth not to touch it.

And when I did draw down? I made it my business to put the money back as soon as possible.

The longest journey begins with a single step

If you haven't got any savings at all, start some. As Cunningham notes, you can't afford not to save.

Look really, really hard at your budget. Track your spending. If you could squirrel away even $2 to $5 a week, in a year's time you'd have $104 to $260 that might otherwise have gone to the dollar menu or a magazine when you went in to pay for gas.

It may sound pitiful to save just $2 a week. But you really do have to start somewhere, and once you see the numbers creep up, you, too, may work hard to keep them rising. You might pack an economical sandwich instead of having lunch out five times a week. Maybe temporarily cut the cable. Once your clothes wear out, hit the consignment stores or better yet, thrift stores.

When that $1,000 expense (or even a $100 one) pops up, being able to meet even some of it in cash means less damage to your credit card. Or, heaven forbid, your needing to disregard regular monthly expenses.

More on MSN Money:

Aug 15, 2011 9:01AM
That's kind of a scary figure.  Only 36%??  My wife and I are blessed in that we have savings, Roth accounts, 401K and pensions.  The mortgage is paid off and we have zero debt.  Even with that, I still worry at times about having enough money.  I would sure be depressed if we couldn't come up with $1K in an emergency.  I have to feel for anyone in that position.  Of course, if they are still paying for smart phones, cable and other such frivolous luxuries they need to stop it and get with the program.  An emergency fund is critical in my opinion. 
Aug 15, 2011 11:30AM
Wow, that's really sad and scary.  I'm young and still paying off my student loans, but I still save a little when I can.  I worry that the $10,000 I've got in savings isn't enough!
Aug 13, 2011 1:45PM

holytoledo1234, please note 2/3 of the people said they could raise the money. I wonder how many actually had it in cash??

Aug 14, 2011 11:38PM
Just $1k?  Man, a set of Michelin tires for my Honda CRV costs about $1k.   What kind of lack of planning are these people doing.
Aug 13, 2011 11:39AM
Last week MSN asked how many people would have trouble meeting a $1000 emergency expense and 2/3 of the people responding said they would have no problem raising  the money.
Aug 14, 2011 10:27PM
My wife has 1000 dollars in her pocketbook. Ten 100 dollar bills.
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